May 22, 2008
U.S. Travel Plans Hit The Skids
Oil Prices Top $135; Survey Shows Most Americans Altering Or Canceling Summer Trips
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AAA predicted the number of Americans planning to drive more than 50 miles over Memorial Day weekend is down by 1 percent. (iStockphoto)
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Why Is Oil So Expensive?
A new group of investors are buying at least 850 million more gallons of oil than they did five years ago. Their collective actions may be behind rising gas prices. Anthony Mason reports.
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American Airlines Cuts Back
American Airlines announced that skyrocketing fuel prices are forcing it to raise fees, cut jobs and drop flights, slashing more than 10 percent of its flight schedule. Nancy Cordes reports.
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As the cost of oil continues its surge, it is almost certain to dampen travel plans for millions of Americans heading into the Memorial Day holiday weekend and the upcoming summer months.
A new Rand McNally survey says two-thirds of Americans planning road trips this summer are either altering their plans to shorten their trips or canceling altogether. AAA predicted the number of Americans planning to drive more than 50 miles over Memorial Day weekend is down by 1 percent. Air travel will decline slightly as well, AAA said.
"We're really in kind of tenuous territory," said Suzanne Cook, research vice president at the Travel Industry Association.
The survey comes as American Airlines announced it will start charging $15 for the first checked bag, cut domestic flights and lay off possibly thousands of workers.
The airline plans to cut domestic flight capacity by 11 percent to 12 percent in the fourth quarter, after the peak summer season is over. That is more than double American's previous plans to cut flying by 4.6 percent in late 2008.
"I do think it's a bubble, but i don't think we'll go back to the numbers between $20 and $60 that we saw before," oil and gas analyst Tom Kloza told CBS' The Early Show Thursday of the rising oil prices. He added: "I don't think it will burst. It will come off substantially."
In the casino capital of Las Vegas, things already are tough.
Room occupancy rates have fallen slightly, forcing casinos to lower hotel room prices. Gambling giant MGM Mirage Inc. and local casino operator Station Casinos have cut their work forces. Las Vegas Sands, which opened a massive new casino on the Strip in January, unexpectedly swung to a loss of $11.2 million in the first quarter of the year.
Analysts expect the slowdown to be most dramatic at mid-market Las Vegas resorts that rely on tourists driving in from southern California. Those tourists already began staying away in the early part of the year, before gas prices rose again.
U.S. travelers have no choice but to cut back.
Margaret Stone, from small-town Lucas, Ohio, is hosting two exchange students from Europe and recently brought the two teenage boys to see the monuments and museums on the National Mall in Washington.
But she may have to cancel a planned trip to North Carolina in September when her newest granddaughter is born. "I'm on a fixed income," Stone said. "It's not going to change. So I'm going to have to make some adjustments."
On the steps of the National Air and Space Museum in Washington, Lynn Johnson, of Greenville, South Carolina, said she was on a trip with her daughter's fifth-grade class. But she said the family might not be able to afford another long-distance trip. They might escape to the closest beach this summer instead.
With the summer months fast approaching, tourism officials are waving discounts, freebies and other marketing ploys to draw visitors who might be reluctant to open their purse strings, especially outside major cities.
In Rehoboth Beach, Delaware, innkeepers are advertising free gas cards with a reservation or an extra night for free, hoping to soothe tourists' concerns about gas prices.
Just south of Washington, George Washington's Mount Vernon estate in Virginia has created a discount promotion with the Corcoran Gallery of Art to tie in with the exhibit, "The American Evolution: A History Through Art." A ticket purchased at one attraction is worth a half-price discount at the other. In June, Mount Vernon will try giving away reproductions of George Washington's china to one visitor each day.
"We're interested to see if it might bring out people who just need that extra little push," said Emily Coleman Dibella, Mount Vernon's spokeswoman.
Tourism officials believe destinations in urban corridors may be most insulated from rising prices. Washington, for example, is ranked as one of the most expensive tourist destinations with an average price of $352 a day for a family of four, according to AAA figures. But local tourism officials say the city benefits from its proximity to cities within a day's driving range, and the influx of European tourists taking advantage of the dollar's weak value.
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Lucas, Ohio
In New York City, some officials are even more optimistic, saying the U.S. economic downturn might even benefit city businesses. In the first three months of 2008, an estimated 9.5 million people visited New York City, up by 1 million from the same period a year earlier. Visitor spending rose by an estimated $700 million.It's not going to change. So I'm going to have to make some adjustments.
Margaret StoneLucas, Ohio
Faced with an expensive euro and tighter budgets, Americans who might usually choose a trip to Europe are more likely to take a shorter trip to New York, said George Fertitta, who heads the city's tourism office.
"A trip to New York versus a trip to London," he said, "dollar for dollar this is as good as it gets."
Meanwhile, the world's top energy watchdog is preparing a sharp downward revision of its oil-supply forecast, according to a report in The Wall Street Journal reported.
Light, sweet crude for July delivery rose as high as $135.09 before falling back slightly. By midday in Europe, the contract stood at $134.37 a barrel in electronic trade on the New York Mercantile Exchange, up $1.20 on Wednesday's close of $133.17.
That settlement price, up $4.19 on Tuesday's close, marked NYMEX crude's largest one-day price advance since March 26.
Meanwhile, July Brent crude on the ICE Futures exchange in London also reached a new record of $135.13 a barrel Thursday. By midday in Europe, it had retreated to $134.35, a gain of $1.65 on its Wednesday close.
"Simply put, this is a market you cannot afford to be short in," said U.S. analyst and trader Stephen Schork about Brent futures in his Schork Report.
With gas and oil prices setting new records nearly every day, analysts have begun to wonder what might stop prices from rising. There are technical signals in the futures market, including price differences between near-term and longer-term contracts, that crude may soon fall. But with demand for oil growing in the developing world, and little end in sight to supply problems in producing countries such as Nigeria, few analysts are willing to call an end to crude's rally.
"The sentiment in the market is very bullish at the moment," said David Moore, commodity strategist with the Commonwealth Bank of Australia in Sydney. "The U.S. dollar was weaker last night, and also the U.S. EIA report showed an unexpected decline in U.S. commercial crude oil inventories, so there's a combination of factors pushing the oil prices higher."
Crude prices breezed past $130 early Wednesday, then accelerated when the U.S. Energy Department's Energy Information Administration said U.S. crude inventories fell by more than 5 million barrels last week. Analysts had expected a modest increase.
Investment bank Goldman Sachs last week revised its oil price forecast for the second half of 2008 from $107 to $141 a barrel. But some analysts saw the new target becoming a reality much sooner.
The Wall Street Journal reported Thursday that the Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields.
For years the IEA has predicted that supplies of crude and other liquid fuels will arc gently upward to keep pace with rising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day currently.
The agency is now concerned that aging oil fields and diminished investment mean that companies could struggle to surpass 100 million barrels a day in production over the next two decades, the paper reported.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
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See all 272 CommentsMaybe the price of gas will help us to do what we should have been doing for some time, boycotting neocon-owned businesses. Now if we can selectively target and have rolling boycotts against banks, the stock market, and Fox news, we might begin to see some progress out of the mess.
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Posted by Duggock at 09:00 AM : May 22, 2008
+ report abuse
Would be great! Problem is the Fascist distroyed all out Unions!! They are the only one''s who could carry out such an action. Guess the German''s were right...after Hitler and the Fascist were defeated, THEY made it a crime to bust a Union. Sieg Heil Bush
Well it looks as though these words are coming true. America is going to destroy it''s self with greed and our government is going to stand by and watch it happen.
Our government regulates the prices and quantities of commodities all the time but now its going to let a hand full of greedy oil speculator bring this country to it''s knees.
I guess we are just as stupid as we are smart.
copyright free technologies, which when combined makes us as a world more efficient,
a little at a time, if such technologies
are not freely available to everyone, then the startup companies will just get gobbled up by the energy giants and keep us addicted to the oil
which is free to begin with, they just charge you and i foir taking it out.
Posted by gopsoccermom
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Well well, so what. I don''t like you any better than I did yesterday. Just remember your greed will catch up with you, and your braggart ways will be your downfall. Wait and see.
Posted by gopsoccermom at 08:52 AM : May 22, 2008
Again, you are the problem here! Your ignorance and selfishness are the reason that our country has not adapted and demanded change in our economy because you''re satisfied in your own "little world." It will come crashing down on you sooner or later. Keep up the good work....:(
THAT SUPER FANTASTIC just in time for summer and Memorial Day Weekend.
Here is a QUESTION FOR EVERYBODY how much will the Price of Regular Unleaded Jump Tonight. This Morning in KANSAS CITY regular unleaded 87 octane is $3.65 a gallon.
I am betting that tomorrow Regular Unleaded will be $3.80 or more a gallon. It just has to jump almost 15 cents or more tonight because the Oil Companys Can Not Miss an Opportunity to Shaft it too the American Consumer and the Vacation Driver this weekend.
Fill you tanks tonight because tomorrow its going to be 15+ cents more I will bet $10 on that.
Posted by gopsoccermom at 08:52 AM : May 22, 2008
Again, you are the problem here! Your ignorance and selfishness are the reason that our country has not adapted and demanded change in our economy because you''''re satisfied in your own "little world." It will come crashing down on you sooner or later. Keep up the good work....:(
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Posted by arlt1627 at 09:17 AM : May 22, 2008
The rich arent the only ones who live in thier own "little world". There are people in other social classes who have thier own "little world" about america, politics, etc etc.
Posted by gopsoccermom at 08:52 AM : May 22, 2008
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If your husbands money comes from the expendable incomes of Americans, then you and your husband are about to go broke.
Posted by jamesm12341
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You have no idea what you are addressing here. I am a disabled Vietnam Vet, who has had to depend on the poor care that they VA would give me, and the meager disability checks they give me to exist. The American dream was something I have never had a chance to enjoy, or even have a chance to try for. Am I a little angry at the greedy bast@rds for what they have failed to care about, or the way they have reneged on the promises they made to we who fought and gave it all up for the rich neo-cons, and the war-mongering corporations, Well I guess the answer is evident. Now what little I have managed scrap and save is as worthless as the promises as I was given.
Get off your high horse, and come down and crawl with us for a while. I think you might be more than a little angry, too.
such a nut case.....
im liberal to the core and i do make enough that i owe taxes every year,
where i live Repugs are illiterate Aggies.
Posted by gopsoccermom
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Your religion has been the down fall of this country. Your religion has got us into more wars than I can count. You want all the world to believe just like you do, and anyone who doesn''t is a heathen. It was you religious types who saw the native American, as expendable, and gave them blankets, of course those blankets were filled with smallpox, and thousands died. Don''t give me your religious rhetoric, you got no idea about religion. It is evident in your braggart ways.
Record inflation, record deficits, tanked economy, war without end......
Thanks Bushies!
translation: i am jealous of your husband for obtaining the american dream, i had same chances in life as him but i didnt work towards them. Now i am jealous and angry at anyone who has succeeded in life so i come on here and put them down. I try to bring them down to my level instead of me rising to theirs.
Posted by jamesm12341 at 09:27 AM : May 22, 2008
Translation back: you''re a trolling idiot with no real thoughts. Miss GOP soccer mom has done nothing other than marry into money.....I almost feel bad for her....but the point is that those people will drive the "Tahoes, F-350s, Yukons, Suburbans" etc.....Keep up the good work James.....I''ll keep working my full-time salaried job, with my CAR that gets nearly 30 mpg, my house, etc.....don''t worry about me. However, I do worry about what you''re doing? You seem to be on here all the time and angry. Do you need help?
Soccer mom sounds like an ex stripper who married an older gentleman.....
We must drill off shore (Florida and California) and get started immediately. The folly of not doing so will kill us in the future with $8 or $10 a gallon gas and limited refinery capacity.
We need a Manhattan Project for oil and gas exploration - to give us the time to raise gas mileage to 50mph with hybrid gas electrical cars like Nissan is developing and diesel cars like VW is perfecting.
Our auto industry destroyed itself, according to David Halberstam''s book, The Reckoning. It has fought raising gas mileage since the 60s and 70s.
Now Congress is facing its own reckoning with Nancy in Wonderland - mad as a hatter - who continues to fund ethanol production from corn in her farm bill.
Posted by jamesm12341
Your a fricking liar, look at the post you addressed it to me. Just like a neo-con to take back water, and do just what you did, your a liar, and no doubt, a good one.
I see the Bush/Republican opologists are out again today making excuses for failed leadership.
If only we had spent the 3 trillion dollars we''re spending to steal Iraq''s oil on developing sustainable energy technologies that already exist, we would be well on our way to energy independence. Then we''d be exporting this technology to the world instead of exporting blood and money to import oil. Of course, so-called "conservatives" are incapable of this kind of forward thinking.
Thanks Bushies!
Posted by gopsoccermom at 09:43 AM : May 22, 2008
Maybe CBS will do the same. Why are you on here anyways?? To feel good about yourself.....why don''t you go out and do some charity work since your kids are at school. Do something to promote positive change in America besides gloating about your good fortunes. I will keep going to work, church, and help my community out. How about you?
This is the problem we have with our line of thinking. The paper money without productivity does not worth the paper that is printed on. No amount of money can buy oil if it runs out.
US economy is increasingly overtaken by non-productive sectors like huge management, legal and financial costs. True enterprenuaships where you produce something to benefit you and the country is progrssively becoming harder to find.
This nation was clearly forewarned in the late 70''s about the idiocy of relying on foreign oil, but the personal agendas of politicians preempted common sense. So here we are, and nothing will be done again.
I don''t care about the price of oil, just the ability to purchase fuel for my automobiles, trucks and recreational equipment. While it costs considerably more than it did, the net result is positive in that it becomes a luxury item and less available to the
masses.
I expect to see more people riding bicycles like the illegals do and that is a good thing.
andylance1
I doubt very seriously that the little bit of extra oil produced by drilling the few areas that are off limits would raise the global supply sufficiently to decrease the price. There''s been a huge increase in domestic production in the last ten years and the price continues to skyrocket. I live in an oil rich state and the rig count has double here.
Posted by gopsoccermom
thus my comment that libs want successful people to come down to their level rather than libs try to rise up to successful peoples level. Typical lib here.
Posted by jamesm12341
These are both comments of the neo-con self righteous, who believe that anyone who disagrees with them is not as good as them. Its not a matter of you coming down to the level of the poor, and the disabled, its a matter of you giving them a leg up. and the Neo-cons have never give a *** about anyone but themselves, and the greed they could inspire in their off-springs. It made no difference if they had to steal it, or kill for it, they did it. Then they justified it with their religion.
I see the Bush/Republican apologists are out again today making excuses for failed leadership.
If only we had spent the 3 trillion dollars we''''re spending to steal Iraq''''s oil on developing sustainable energy technologies that already exist, we would be well on our way to energy independence. Then we''''d be exporting this technology to the world instead of exporting blood and money to import oil. Of course, so-called "conservatives" are incapable of this kind of forward thinking.
Thanks Bushies!
I doubt very seriously that the little bit of extra oil produced by drilling the few areas that are off limits would raise the global supply sufficiently to decrease the price. There''''s been a huge increase in domestic production in the last ten years and the price continues to skyrocket. I live in an oil rich state and the rig count has double here.
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Posted by singingrick at 09:57 AM : May 22, 2008
Drilling for oil will not help. Conservation is the key. America uses as much oil as the next 6 countries on the list of "Oil Consumption by country".
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Posted by renrivers at 09:41 AM : May 22, 2008
thus my comment that libs want successful people to come down to their level rather than libs try to rise up to successful peoples level. Typical lib here.
Posted by jamesm12341
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Your a liar, that was my post
If only we had spent the 3 trillion dollars we''re spending to steal Iraq''s oil on developing sustainable energy technologies that already exist, we would be well on our way to energy independence. Then we''d be exporting this technology to the world instead of exporting blood and money to import oil. Of course, so-called "conservatives" are completely incapable of this kind of forward thinking.
Thanks Bushies!
Posted by jamesm1234
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So no a veteran who draws disability for the wounds he recieved in your wars is drawing welfare? You are disgusting.
jamesm12341
If only we had spent the 3 trillion dollars we''re spending to steal Iraq''s oil on developing sustainable energy technologies that already exist, we would be well on our way to energy independence. Then we''''d be exporting this technology to the world instead of exporting blood and money to import oil. Of course, so-called "conservatives" are completely incapable of this kind of forward thinking.
It''s time you started defending the interests of your country instead of the failed policies of a failed President.
Posted by jamesm1234
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You neo-cons seem so righteous, I never once blamed the Repugs for my plight after all it was a Democrat who got us into Vietnam, after lying about the Gulf of Tonkin Incident. I just find it disgusting for anyone to brag and spit in the face of a soldier who gave all he had, and believe me, the Democrats are just as worthy of the criticism as the Repugs. Its just that you neo-cons have us in this mess now, and you want to laugh in our face, and brag about how rich you are, after making it off our our blood.
jamesm12341
If only we had spent the 3 trillion dollars we''re spending to steal Iraq''s oil on developing sustainable energy technologies that already exist, we would be well on our way to energy independence. Then we''d be exporting this technology to the world instead of exporting blood and money to import oil. Of course, so-called "conservatives" are completely incapable of this kind of forward thinking.
It''s time you started defending the interests of your country instead of the failed policies of a failed President.
Posted by jamesm12341
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Once again you show how much of an idiot you are. I made no such choice I was drafted you idiot.
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